House Votes to Overturn CFPB Indirect Auto Lending Guidance

The House today reversed the Consumer Financial Protection Bureau’s 2013 guidance on indirect auto lending. In a 234-175 vote, the House passed a Congressional Review Act resolution that would invalidate the guidance, which sought to impose limits on how and what indirect lenders pay car dealers who provide financing and how much discretion dealers have to set loan terms and rates. The Senate previously passed a similar measure to repeal the guidance.

In a letter on Monday urging lawmakers to vote for the resolution, the American Bankers Association noted that the “the regulatory and enforcement uncertainty caused by this guidance has caused many banks to exit or curtail their indirect auto lending, which limits consumer choice and increases the cost of credit.”

Normally the CRA can only be used to invalidate regulatory actions issued within the previous 60 legislative days, but late last year, the Government Accountability Office formally ruled that the guidance constituted a rule, which — even though it was issued without notice and comment — was a general statement of policy with general applicability. That ruling restarted the CRA clock.

“ABA strongly believes that every automobile customer deserves to be treated fairly, and that there is no room for illegal discrimination of any kind in automobile financing,” the association added. “However, the [guidance] was issued without the opportunity for public comment on its legal underpinnings, critical review of its assumption and bases, and its impact on consumer access to convenient and affordable credit.”